Compound interest calculator
Balance after 10 years
£17,175.24
- Paid in
- £13,000.00
- Interest earned
- £4,175.24
Options and yearly figures
| Year | Paid in | Interest | Balance |
|---|---|---|---|
| 1 | £2,200 | £79 | £2,279 |
| 2 | £3,400 | £224 | £3,624 |
| 3 | £4,600 | £437 | £5,037 |
| 4 | £5,800 | £722 | £6,522 |
| 5 | £7,000 | £1,084 | £8,084 |
| 6 | £8,200 | £1,525 | £9,725 |
| 7 | £9,400 | £2,051 | £11,451 |
| 8 | £10,600 | £2,665 | £13,265 |
| 9 | £11,800 | £3,371 | £15,171 |
| 10 | £13,000 | £4,175 | £17,175 |
How the balance is worked out
Interest is added to the balance at the end of each month, at the monthly equivalent of the annual rate you enter. Regular deposits are added at the end of each month or each year, after that period's interest, so a deposit starts to earn interest in the following period.
For a starting amount with no deposits, the result is the same as the standard formula: the starting amount multiplied by one plus the rate for each period, raised to the number of periods. The calculator shows the amount paid in and the interest earned separately, and the yearly figures are under "Options and yearly figures".
What the figures do not show
The calculation is an illustration based on a fixed rate. Savings rates change, and the value of investments can fall as well as rise, so the actual result may be lower or higher. The figures do not take account of tax, charges or inflation, and they are not financial advice.
What is compound interest?
Compound interest is interest paid on the original amount and on the interest already added to it. With simple interest, 1,000 at 5% a year earns 50 every year. With compound interest, the second year's interest is 5% of 1,050, which is 52.50, and the amount added grows each year after that.
Does it matter how often interest is added?
It makes a small difference. At the same annual rate, interest added monthly produces slightly more than interest added once a year, because each month's interest starts to earn interest sooner. On 1,000 at 5% for 10 years the balance is 1,628.89 with yearly compounding and 1,647.01 with monthly compounding.
Does the result allow for tax, charges or inflation?
No. The result is the balance before any tax on the interest and before any account or fund charges, and it is not adjusted for inflation. It also assumes that the rate stays the same for the whole period, which a variable-rate account or an investment will not do.
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